[Federal Register Volume 59, Number 58 (Friday, March 25, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7078]
[[Page Unknown]]
[Federal Register: March 25, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20147; 812-8194]
Merrill Lynch Adjustable Rate Securities Fund, Inc., et al.;
Application
March 18, 1994.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of Application for Exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: Merrill Lynch Adjustable Rate Securities Fund, Inc.,.
Merrill Lynch Americas Income Fund, Inc., Merrill Lynch Basic Value
Fund, Inc., Merrill Lynch California Municipal Series Trust, Merrill
Lynch Capital Fund, Inc., Merrill Lynch Consults International
Portfolio, Merrill Lynch Corporate Bond Fund, Inc., Merrill Lynch
Developing Capital Markets Fund, Inc., Merrill Lynch Dragon Fund, Inc.,
Merrill Lynch EuroFund, Merrill Lynch Federal Securities Trust, Merrill
Lynch Fundamental Growth Fund, Inc., Merrill Lynch Fund For Tomorrow,
Inc., Merrill Lynch Global Allocation Fund, Inc., Merrill Lynch Global
Bond Fund for Investment and Retirement, Merrill Lynch Global
Convertible Fund, Inc., Merrill Lynch Global Resources Trust, Merrill
Lynch Global Utility Fund, Inc., Merrill Lynch Growth Fund for
Investment and Retirement, Merrill Lynch Healthcare Fund, Inc., Merrill
Lynch International Equity Fund, Merrill Lynch International Holdings,
Inc., Merrill Lynch Latin America Fund, Inc., Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, Merrill Lynch Multi-State
Municipal Series Trust, Merrill Lynch Municipal Bond Fund, Inc.,
Merrill Lynch Series Trust, Merrill Lynch Pacific Fund, Inc., Merrill
Lynch Phoenix Fund, Inc., Merrill Lynch Retirement Benefit Investment
Program, Inc., Merrill Lynch Short-Term Global Income Fund, Inc.,
Merrill Lynch Special Value Fund, Inc., Merrill Lynch Strategic
Dividend Fund, Merrill Lynch Technology Fund, Inc., Merrill Lynch
Utility Income Fund, Inc., Merrill Lynch World Income Fund, Inc., and
each future open-end management investment company that is advised by
Merrill Lynch Investment Management, Inc. (doing business as Merrill
Lynch Asset Management and previously known as Merrill Lynch Asset
Management, Inc.) (``MLAM'') or an entity controlling, controlled by,
or under common control (within the meaning of section 2(a)(9) of the
Act) with MLAM, and distributed by Merrill Lynch Funds Distributors,
Inc. (``MLFD'') or an entity controlling, controlled by, or under
common control (within the meaning of section 2(a)(9) of the Act) with
MLFD (all of the above being referred to collectively as the
``Funds''), MLAM, Merrill Lynch Asset Management U.K. Limited (``MLAM
U.K.''), Merrill Lynch (Suisse) Investment Management S.A. (``MLAM
(Suisse)''), Fund Asset Management, Inc., (``FAMI'') and each future
investment adviser that is an entity controlling, controlled by, or
under common control (within the meaning of section 2(a)(9) of the Act)
of MLAM (together, the ``Advisers''), and MLFD and each future
distributor that is an entity controlling, controlled by, or under
common control (within the meaning of section 2(a)(9) of the Act) of
MLFD (each a ``Distributor'').
RELEVANT ACT SECTIONS: Order requested under section 6(c) of the Act to
amend prior orders that granted exemptive relief from sections
2(a)(32), 2(a)(35), 18(f), 18(g), 18(i), 22(c), and 22(d) of the Act
and rule 22c-1 thereunder.
SUMMARY OF APPLICATION: Applicants seek an order under section 6(c) of
the Act amending certain prior orders so that the Funds may issue an
unlimited number of classes of shares, impose a contingent deferred
sales charges (``CDSC'') on certain redemptions of shares, and waive
the CDSC in certain instances.
FILING DATE: The application was filed on December 1, 1992, and amend
on March 17, 1993, May 20, 1993, August 13, 1993, and March 4, 1994.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on April 11, 1994
and should be accompanied by proof of service on applicants, in the
form of an affidavit or, for lawyers, a certificate of service. Hearing
requests should state the nature of the writer's interest, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the SEC's
Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549.
Applicants, Box 9011, Princeton, New Jersey 08543.
FOR FURTHER INFORMATION CONTACT: Marc Duffy, Staff Attorney, (202) 272-
2511, or C. David Messman, Branch Chief, (202) 272-3018 (Office of
Investment Company Regulation, Division of Investment Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch.
Applicants' Representations
1. Each of the existing Funds is organized as an open-end
management investment company registered under the Act and has entered
into an investment advisory agreement with one of the Advisers. Each
existing Fund has entered into a distribution agreement with MLFD under
which MLFD is principal underwriter for the Fund. Each future Fund will
be organized as an open-end management investment company registered
under the Act, will enter into an investment advisory agreement with
one of the Advisers, and will enter into a distribution agreement with
a Distributor. MLAM, a wholly-owned subsidiary of Merrill Lynch & Co.,
Inc., and FAMI, a wholly-owned subsidiary of MLAM, are both registered
investment advisers under the Investment Advisers Act of 1940 (the
``Advisers Act''). MLAM (Suisse) and MLAM U.K. also are registered
investment advisers under the Advisers Act.\1\ MLAM (Suisse) is
subsidiary of Merrill Lynch Bank (Suisse), S.A. which is, in turn, an
indirect subsidiary of Merrill Lynch & Co., Inc., MLAM's parent. MLAM
U.K. also is an indirect subsidiary of Merrill Lynch & Co., Inc. MLFD,
a wholly-owned subsidiary of MLAM, is a registered broker-dealer under
the Securities Exchange Act of 1934.
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\1\MLAM U.K. and MLAM (Suisse) were not parties to the prior
orders.
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2. Applicants received an order pursuant to section 6(c) of the Act
granting an exemption from sections 2(a)(32), 2(a)(35), 18(f), 18(g),
18(i), 22(c), and 22(d) and rule 22c-1 thereunder permitting the Funds
to implement a new method of offering their shares to the public (the
``Original Order'').\2\ In 1991, certain of the parties to the Original
Order received an order under section 6(c) to permit the payment to the
Distributor of an account maintenance fee at a maximum annual rate of
0.25% of the average daily net asset value of the Class A shares
pursuant to a plan adopted in accordance with rule 12b-1 (a ``12b-1
Plan'').\3\ In 1992, the Original Order was amended to delete a
condition requiring the Directors/Trustees of the Funds to purchase an
equal number of Class A shares and Class B shares.\4\ The three
previous orders are referred to collectively herein as the ``Existing
Orders,'' and the relief granted by the Existing Orders is referred to
as the ``Dual Distribution System.''
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\2\Investment Company Act Release Nos. 16503 (July 28, 1988)
(notice), and 16535 (Aug. 23, 1988) (order).
\3\Investment Company Act Release Nos. 18015 (Feb. 22, 1991)
(notice), and 18059 (Mar. 22, 1991) (order).
\4\Investment Company Act Release Nos. 18684 (Apr. 28, 1992)
(notice), and 18732 (May 27, 1992) (order).
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3. Under the Dual Distribution System, the Funds currently may
offer two classes of shares: (a) Class A shares that are subject to a
conventional front-end sales load and a rule 12b-1 fee, and (b) Class B
shares that are subject to a contingent deferred sales charge
(``CDSC'') and a rule 12b-1 fee. The Funds also may waive the CDSC with
respect to certain redemptions of Class B shares.
4. The Existing Orders were granted pursuant to a number of
representations and are subject to a number of conditions. Applicants
believe that certain of these representations and conditions
unnecessarily restrict the operation of the Dual Distribution System.
The Existing Orders also prevent the Funds from issuing other classes
of shares. Applicants seek an exemptive order to permit them the
flexibility to create new classes of shares and implement new types of
sales charge and shareholder servicing arrangements.
5. Applicants propose to establish a multiple distribution and
shareholder servicing arrangement (the ``Multi-Class System''). Under
the Multi-Class System, each Fund would have the flexibility to from
time to time create one or more additional classes of shares the terms
of which may differ as described in the conditions below. In addition,
applicants may offer an automatic conversion feature as described
below.
6. Applicants also may enter into shareholder servicing plans with
various organizations. Shareholder servicing plans are used to
compensate certain organizations for providing support services to
their customers. Such services typically would include aggregating and
processing purchase and redemptions requests from a service
organization's customers, placing net purchase and redemption orders
with the Funds' Distributor, processing dividend payments on behalf of
customers, periodically providing information to customers showing
their share positions, and other similar services. Although none of the
Funds currently has a shareholder servicing plan, applicants are
seeking the broadest relief presently permitted so they will have the
flexibility to respond to different market opportunities.
7. Applicants also seek relief to offer an automatic conversion
feature. Applicants propose that one or more classes of shares in a
Fund (the ``Higher Fee Class'') (e.g., a class of shares paying a rule
12b-1 fee or a non-rule 12b-1 shareholder servicing fee which is
greater than that applicable to another class of shares in the same
Fund) may automatically convert to shares of another class (the ``Lower
Fee Class'') without the imposition of any additional sales charges
after a certain period of time. Thereafter, Higher Fee Class shares
will be subject to the lower continuing fees, if any, applicable to
Lower Fee Class shares.
8. Each time any shares convert into shares of another class, a pro
rata portion of the shares purchased through the reinvestment of
dividends and other distributions paid in respect of Higher Fee Class
shares in the shareholder's account also would convert into shares of
the other class. The portion would be determined by the ratio that the
shareholder's shares converting into shares of the other class
(excluding shares acquired through dividends and distributions) bears
to the shareholder's total shares possessing this conversion feature
and not acquired through dividends and distributions.
9. In one circumstance, it may be impossible for applicants to
determine the period of time individual beneficial owners of Higher
Continuing Fee Class shares have held such shares because of
intermediary retirement plan record holders. Accordingly, applicants
request the ability to treat Higher Continuing Fee Class shares that
are Class B shares purchased by certain retirement plans (the
``Retirement Plans'') as described below.
10. Funds cannot keep track of the holding periods of Class B
shares held by third parties in accounts on behalf of their individual
plan participants. While a Fund's transfer agent keeps records
indicating each purchase and sale transaction effected by the plan
sponsor, such data does not correlate with purchase and sale
transactions effected for the benefit of the individual plan
participants. Therefore, a Fund is unable to determine the period of
time an underlying beneficial shareholder has held Class B shares for
purposes of determining when an automatic conversion would occur.
Furthermore, the third party plan sponsors might not have such
historical records readily accessible to be able to determine holding
periods.
11. The result is that even if a Fund followed its transfer agent's
records in deciding when to convert Class B shares held of record by
Retirement Plans, some plan sponsors would be unable to allocate fairly
such Lower Continuing Fee Class Shares among the underlying accounts
because there is no necessary correlation between the purchase and sale
of Class B shares at the plan level and the placing of transaction
orders by the plan sponsor with the Fund.
12. Applicants will treat Class B shares owned by Retirement Plans
separately for purposes of the conversion feature. A Retirement Plan
may own Class B shares in several Funds. Applicants propose that in the
month in which the first share purchased by a particular Retirement
Plan has been held for the period required for conversion, all Class B
shares of all Funds held in that Retirement Plan simultaneously will be
exchanged for Lower Continuing Fee Class Shares of the appropriate
Funds. The conversion period for Retirement Plans will be set at a
uniform period disclosed in each Fund's Prospectus or Statement of
Additional Information and will be no longer than the maximum period
applicable to Class B shares in the Funds held by shareholders who are
not Retirement Plans.
13. Applicants' modified method of conversion for Retirement Plans
will apply only to shares that are outstanding before the conversion of
all Class B shares of all Funds held by a Retirement Plan. After such
conversion, applicants will not sell shares having a conversion feature
to Retirement Plans unless the Fund or the Retirement Plan has adequate
record keeping systems in place to account for the length of time
participants in a Retirement Plan have held their shares. Thus, if
Class B shares are sold to a Retirement Plan after the initial
conversion, they will convert into Lower Continuing Fee Class Shares in
the same manner as shares held by all other Class B shareholders.
14. For administrative efficiency and to reduce a Fund's
recordkeeping expenses, if after Higher Continuing Fee Class shares
would convert into Lower Continuing Fee Class shares a shareholder
would still own a de minimis number of Higher Continuing Fee Class
shares of a Fund, those remaining shares will simultaneously be
exchanged for Lower Continuing Fee Class shares when the other shares
are so converted. A de minimis level (expressed either as a dollar
amount or a number of shares) will be established for each Fund, will
be uniformly applied to all shareholders and will be disclosed in the
Fund's prospectus. All accounts falling below the de minimis level will
be converted.
15. The Funds will obtain opinions of counsel or rulings of the
Internal Revenue Service that the conversion of shares does not
constitute a taxable event under current federal income tax law. The
conversion of shares may be suspended if an opinion of counsel or
ruling with respect to the taxability of conversion is no longer
available at the time of such conversion. If conversion is suspended,
higher Fee Class shares might continue to be subject to the higher rule
12b-1 or non-rule 12b-1 shareholder servicing fees for an indefinite
period.
16. Before the creation of any new class of shares and once the
characteristics of such proposed class have been decided, the Expert
(as defined in condition 6), or a suitable substitute Expert, will
review the methodologies and control procedures used with respect to
the net asset values and dividends and distribution determinations for
such new class of shares.
17. The Funds' CDSC arrangements (including any waivers) will be
identical to those described in the Existing Orders except that instead
of being limited to only Class B shares in a Fund, such CDSC
arrangements may apply to more than one class of shares in the same
Fund.\5\
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\5\Applicants received a no-action letter from the SEC allowing
waiver of the CDSC in connection with redemptions by qualified
retirement plans regardless of whether such redemptions occur before
or after an employee's retirement. Merrill Lynch Retirement Benefit
Government Securities Fund, Inc. (Aug. 30, 1990).
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18. Applicants will comply with Article III, Section 26 of the
Rules of the Fair Practice of the National Association of Securities
Dealers, Inc. in determining the maximum limitation on sales charges
that may be imposed.
Applicants' Legal Analysis
Applicants believe that the granting of the relief requested will
let applicants respond to competition from others and changing customer
demands while relieving the SEC and its staff of the burden of
repeatedly reviewing requests for greater flexibility in administering
the Funds' distribution and shareholder servicing arrangements.
Applicants believe that the relief requested is appropriate in the
public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
Applicants' Conditions
Applicants request an order of the SEC pursuant to section 6(c)
amending the Existing Orders so that the conditions thereto read in
their entirety as follows:
1. Each class of shares will represent interests in the same
portfolio of investments of a Fund and be identical in all respects,
except as set forth below. Any differences among the terms of the
various classes of shares of the same Fund will relate solely to: (a)
The impact of different 12b-1 Plan payments and non-rule 12b-1
shareholder servicing plan payments made by a particular class of
shares (and any other costs relating to the implementation of a 12b-1
Plan or non-rule 12b-1 shareholder servicing plans) which will be borne
solely by shareholders of such class, shareholder servicing costs
attributable solely to a particular class, and any incremental expenses
subsequently identified that should be properly allocated to one class
which shall be approved by the SEC pursuant to an amendment order, (b)
voting rights on matters that pertain to 12b-1 Plans, or if presented
to shareholders, voting rights on matters that pertain to non-rule 12b-
1 shareholder servicing plans, (c) redemption fees, (d) exchange
privileges, (e) the designation of each class of shares of a Fund, and
(f) an automatic conversion feature pursuant to which shares of one
class automatically would convert into shares of another class after a
period of time.
2. The Directors/Trustees of each of the Funds, including a
majority of the independent Directors/Trustees, shall have approved the
Multi-Class System, including the conversion feature, prior to the
implementation of the Multi-Class System by a particular Fund. The
minutes of the meetings of the Directors/Trustees of each of the Funds
regarding the deliberations of the Directors/Trustees with respect to
the approvals necessary to implement the Multi-Class System, including
the conversion feature, will reflect in detail the reasons for
determining that the proposed Multi-Class System is in the best
interests of both the Funds and their respective shareholders.
3. On an ongoing basis, the Directors/Trustees of the Funds,
pursuant to their fiduciary responsibilities under the Act and
otherwise, will monitor each Fund for the existence of any material
conflicts among the interests of the various classes of shares. The
Directors/Trustees, including a majority of the independent Directors/
Trustees, shall take such action as is reasonably necessary to
eliminate any such conflicts that may develop. The Advisers and the
Distributor will be responsible for reporting any potential or existing
conflicts to the Directors/Trustees. If a conflict arises, the Advisers
and the Distributor at their own costs will remedy such conflict up to
and including establishing a new registered management investment
company.
4. The Directors/Trustees of the Funds will receive quarterly and
annual statements concerning distribution and non-rule 12b-1
shareholder servicing plan expenditures complying with paragraph
(b)(3)(ii) of rule 12b-1, as it may be amended from time to time. In
the statements, only distribution or servicing expenditures properly
attributable to the sale or servicing of one class of shares will be
used to support the rule 12b-1 fee or servicing fee charged to
shareholders of such class of shares. Expenditures not related to the
sales or servicing of a specific class of shares will not be presented
to the Directors/Trustees to support rule 12b-1 fees or service fees
charged to shareholders of such class of shares. The statements,
including the allocations upon which they are based, will be subject to
the review and approval of the independent Directors/Trustees in the
exercise of their fiduciary duties.
5. Dividends paid by a Fund with respect to each class of shares,
to the extent any dividends are paid, will be calculated in the same
manner, at the same time, on the same day, and will be in the same
amount, except that costs and distributions fees associated with any
12b-1 Plan or shareholder servicing plan relating to a particular class
will be borne exclusively by such class and except that any incremental
expenses subsequently identified that should be properly allocated to
such class which shall be approved by the SEC pursuant to an amended
order will be borne exclusively by such class.
6. The methodology and procedures for calculating the net asset
value and dividends/distributions of certain classes and the proper
allocation of income and expenses between those classes has been
reviewed by an expert (the ``Expert''). The Expert has rendered a
report to applicants (which has been provided to the staff of the SEC)
stating that such methodology and procedures are adequate to ensure
that such calculations and allocations will be made in an appropriate
manner. On an ongoing basis, the Expert, or an appropriate substitute
Expert, will monitor the manner in which the calculations and
allocations are being made and, based upon such review, will render at
least annually a report to the Funds that the calculations and
allocations are being made properly. The reports of the Expert shall be
filed as part of the periodic reports filed with the SEC pursuant to
sections 30(a) and 30(b)(1) of the Act. The work papers of the Expert
with respect to such reports, following request by the Funds which the
Funds agree to make, will be available for inspection by the SEC staff
upon the written request for such work papers by a senior member of the
Division of Investment Management or of a Regional Office of the SEC,
limited to the Director, an Associate Director, the Chief Accountant,
the Chief Financial Analyst, an Assistant Director, and any Regional
Administrators or Associate and Assistant Administrators. The initial
report of the Expert is a ``Special Purpose'' report on the ``Design of
a System'' as defined and described in SAS No. 44 of the American
Institute of Certified Public Accountants (``AICPA''), and the ongoing
reports will be ``Reports on Policies and Procedures Placed in
Operation and Tests of Operating Effectiveness'' as defined and
described in SAS No. 70 of the AICPA, as it may be amended from time to
time, or in similar auditing standards as may be adopted by the AICPA
from time to time.
7. Applicants have adequate facilities in place to ensure
implementation of the methodology and procedures for calculating the
net asset value and dividends/distributions among the various classes
of shares and the proper allocation of income and expenses among such
classes of shares and this representation has been concurred with by
the Expert in the initial report referred to in Condition 6 above and
will be concurred with by the Expert, or an appropriate substitute
Expert, on an ongoing basis at least annually in the ongoing reports
referred to in Condition 6 above. Applicants agree to take immediate
corrective action if the Expert, or appropriate substitute Expert, does
not so concur in the ongoing reports.
8. The prospectuses of the Funds will contain a statement to the
effect that a financial consultant and any other person entitled to
receive compensation for selling or servicing Fund shares may receive
different compensation with respect to one particular sales arrangement
for a class of shares over another arrangement for a class of shares in
the Fund.
9. Merrill Lynch, Pierce, Fenner & Smith Incorporated will adopt
compliance standards as to when shares of a particular class may
appropriately be sold to particular investors. Applicants will require
all persons selling shares of the Funds to agree to conform to these
standards.
10. The conditions pursuant to which the exemptive order is granted
and the duties and responsibilities of the Directors/Trustees of the
Funds with respect to the Multi-Class System will be set forth in
guidelines which will be furnished to the Directors/Trustees as part of
the materials setting forth the duties and responsibilities of the
Directors/Trustees.
11. Each Fund will disclose the respective expenses, performance
data, distribution arrangements, service fees, sales loads, deferred
sales loads, and exchange privileges applicable to each class of shares
in every prospectus, regardless of whether all classes of shares are
offered through each prospectus. The shareholder reports of such Fund
will disclose the respective expenses and performance data applicable
to each class of shares in every shareholder report. The shareholder
reports will contain, in the statement of assets and liabilities and
statement of operations, information related to the Fund as a whole
generally. Each Fund's per share data, however, will be prepared on a
per class basis with respect to the classes of shares of such Fund. To
the extent any advertisement or sales literature describes the expenses
or performance data applicable to any class of shares, it will disclose
the respective expenses and/or performance data applicable to all
classes of shares. If applicants provide information for publication in
any newspaper or similar listing of the Funds' net asset values and
public offering prices, information for classes of shares will be
provided separately.
12. Applicants acknowledge that the grant of the exemptive order
requested by this application will not imply SEC approval,
authorization or acquiescence in any particular level of payments that
the Funds may make pursuant to 12b-1 Plans or shareholder servicing
plans in reliance on the exemptive order.
13. Any automatic conversion of shares of one class into shares of
another class will occur on the basis of the relative net asset values
of the shares of the two classes, without the imposition of any sales
load, fee, or other charge. After conversion, the converted shares will
be subject to an asset-based sales charge and/or service fee (as those
terms are defined in Article III, Section 26 of the NASD's Rules of
Fair Practice), if any, that in the aggregate are lower than the asset-
based sales charge and service fee in the aggregate to which they were
subject prior to the conversion.
14. If a Fund implements any amendment to its 12b-1 Plan (or, if
presented to shareholders, adopts or implements any amendment of a non-
rule 12b-1 shareholder services plan) that would increase materially
the amount that may be borne by a class of shares subject to the plan
(``Subject Shares''), existing shares of another class that would
otherwise convert into Subject Shares (``Converting Shares'') will stop
converting into Subject Shares unless the holders of the Converting
Shares, voting separately as a class, approve the proposal. The
Directors/Trustees of the Funds shall take such action as is necessary
to ensure that existing Converting Shares are exchanged or converted
into a new class of shares (``New Subject Shares''), identical in all
material respects to Subject Shares as they existed prior to
implementation of the proposal, no later than such shares previously
were scheduled to convert into Subject Shares if such holders of
Converting Shares do not approve such proposal and such proposal is
approved by the holders of the Subject Shares and such material
increase occurs. If deemed advisable by the Directors/Trustees of the
Funds to implement the foregoing, such action may include the exchange
of all existing Converting Shares for a new class (``New Converting
Shares''), identical to existing Converting Shares in all material
respects except that New Converting Shares will convert into New
Subject Shares. New Subject Shares or New Converting Shares may be
formed without further exemptive relief. Exchanges or conversions
described in this condition shall be effected in a manner that the
Directors/Trustees of the Funds reasonably believe will not be subject
to federal taxation. In accordance with condition 3, any additional
cost associated with the creation, exchange, or conversion of New
Subject Shares or New Converting Shares shall be borne solely by the
Advisers and the Distributor. Converting Shares sold after the
implementation of the proposal may convert into Subject Shares subject
to the higher maximum payment, provided that the material features of
the Subject Shares plan and the relationship of such plan to the
Converting Shares are disclosed in an effective registration statement.
15. In the case of Funds adopting shareholder servicing plans, such
plans will be adopted and operated in accordance with the procedures
set forth in rule 12b-1 (b) through (f) as if the expenditures made
thereunder were subject to rule 12b-1, except that shareholders will
not enjoy the voting rights specified in rule 12b-1.
16. Applicants will comply with the provisions of proposed rule 6c-
10 under the Act (Investment Company Act Release No. 16619 (Nov. 2,
1988)), as such rule is currently proposed and as it may be reproposed,
adopted or amended.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-7078 Filed 3-24-94; 8:45 am]
BILLING CODE 8010-01-M